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laiz [17]
2 years ago
5

Assume that the required reserve ratio is 20 percent. If the Federal Reserve buys $80 million in government securities from comm

ercial banks, then the money supply will immediately Multiple Choice increase by $0 with this transaction, and the maximum money-lending potential of the commercial banking system will increase by $400 million. increase by $0 with this transaction, but the maximum money-lending potential of the commercial banking system will increase by $320 million. increase by $80 million with this transaction, and the maximum money-lending potential of the commercial banking system will increase by another $400 million. increase by $80 million with this transaction, and the maximum money-lending potential of the commercial banking system will increase by another $320 million.
Business
1 answer:
Anni [7]2 years ago
5 0

Answer: increase by $80 million, and the maximum money-lending potential of the commercial banking system will increase by $400 million

Explanation:

Based on the information given in the question, the money multiplier will be calculated thus:

Money multiplier = 1/Required reserve ratio

where,

Required reserve ratio = 20%

Money Multiplier will now be:

= 1/0.20

= 5

Therefore, the maximum money-lending potential will be:

= $80 million × 5

= $400 million

Therefore, the money supply will by $80 million, and the maximum money-lending potential of the commercial banking system will increase by $400 million

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3 years ago
Thomas Engel contributed equipment, inventory, and $45,000 cash to a partnership. The equipment had a book value of $25,000 and
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Thomas capital

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Inventory                   25,000

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Total                       <u>  100,000</u>

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